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December 13, 2019



Dear Scarsdale Friends and Neighbors,


We saw democracy in action on December 11 at the Freightway Development meeting. Hundreds of Scarsdale residents came to learn and opine about the two bidders whom the Scarsdale Mayor and Board of Trustees chose behind closed doors to be the finalists in this incredibly important project. 

If you missed the meeting, the video is here. East End Capital LLC's and
 LCOR LLC's design is here, and Avalon Bay Community's presentation is hereThe Village updated its Frequently Asked Questions about Freightway yesterday, but unfortunately, none of the questions, that we have been sending to the Mayor and Trustees and have published in this newsletter several times, have been answered.

Too much important information is missing about Freightway; hence it does not make sense to move forward with this development as it stands. Broad and diverse community input is essential for this project to be a success. The Freightway survey conducted by the Village in early 2018 barely reached only 2% of Scarsdale's adults; many merchants have told us that they never even knew about the survey and would have liked to participate.  Furthermore, the Village only notified the Scarsdale Business Alliance about Wednesday's Freightway Public forum on Tuesday afternoon; hence most could not attend to give feedback.

Village personnel, Scarsdale Mayor, and the Board of Trustees have not:
  • calculated how many adults and children could move into the proposed rentals and what impact that rise in population would have on our schools' student-teacher ratio, traffic flows, commuter crowding, or on our Village and School District taxes.
  • presented proposals with facilities which residents want. The Douglass and Kirkendall-Rodriguez families' Forum Downtown Revitalization survey showed that residents want family friendly restaurants, wine bars, pubs, and recreation facilities to revitalize downtown Scarsdale. Residents never asked for rentals. That survey is here.
  • offered us alternatives of what rebuilding the garage would mean to commuters and taxpayers,
  • identified publicly potential conflicts of interest that may exist between bidders and Scarsdale personnel, the Mayor and Board of Trustees,
  • measured the potential financial effect or damage on local businesses adjacent to Freightway,
  • identified potential health hazards to workers on Garth road or the residents who live above those businesses during construction, 
  • found a location for the almost 500 cars left in Freightway during the day; the adjacent lot only holds 60 cars and that is full during the day, or
  • disclosed the financial condition of the bidding developers. As we get close to a recession, residents have a right to analyze whether the bidders can withstand a crisis and complete any development project in Scarsdale in a high quality and timely manner.

Freightway comment period has been extended until February 9. Please write the Mayor, Board of Trustees, and Freightway Subcommittee now and state your views about our schools and what information you would like to see in terms of retail, commercial, and residential units in Freightway. Despite us sending them numerous emails requesting information, the Mayor and Trustees have withheld significant financial information about the bidders' financial condition and about the economics of the Freightway project. The Board's opacity is dangerous to good governance, Scarsdale's reputation, and our pocketbooks




Note: Words throughout this newsletter highlighted in blue have links to relevant information.

 

Freightway Garage, December 13, 2019.

Would You Like To Have Coffee With Scarsdale's Mayor and Trustees Veron and Arest?


Here is your chance.



From Scarsdale Mayor Samwick:

"The next Coffee with the Mayor will be a Coffee with the Freightway Selection Committee.  I am pleased to announce that Trustees Veron and Arest will join me at Starbucks on East Parkway at the Village Center Train Station on Tuesday, December 17th at 5:30 pm until 7:00pm.  We welcome the community to join us for a less formal discussion of items that matter to you, including the potential redevelopment of the Freightway parking garage.  We look forward to seeing you at Starbucks on Tuesday, December 17th at 5:30pm."

Thank You Empty Nesters!
 

I would like to start with a sincere thank you to our empty-nesters. This year our schools expect to spend over $34,000 per pupil, mostly derived from our property taxes. The cold reality is that taxes paid on a median-priced home in Scarsdale do not even cover the cost of one child in our school system. It is the tax payers that choose to stay after kids leave that make this possible.

There has been discussion about the expected demographics for 200 plus new rental units at Freightway but we need to also think about the future demographics for greater than 1,500 single family empty-nests that are increasingly under pressure by rising taxes and their dramatic loss of deductibility on income taxes.

We can make our community friendlier to our longest tenure residents by minimizing tax burdens and increasing amenities. Freightway offers help in this regard and more. Under the leadership of Susan Douglas and the Scarsdale Forum, my wife, Mayra, and I along with Susan’s husband Scott and numerous other concerned members of our community, conducted the most comprehensive survey ever performed about the village center, more than three times the respondents reached for the survey used for the Freightway visioning study.

While retail is suffering nationally it is possible that our woes are amplified by a near monopoly in the Village Center. One key finding of our survey was that our residents and neighbors want more family-friendly casual dining. However, our largest retail landlord has thus far refused to retrofit his buildings to accommodate eateries and instead offered his own plan for new rental apartments. Perhaps Freightway offers an alternative to this monopoly and a way to fulfill consumer demand.

As a parent, it is impossible to ignore the local passion for sports and virtually all of us teach our kids to swim not just for sport but also safety. Most of this money is spent outside of Scarsdale. With the right mix of facilities perhaps including an indoor pool, racket courts, fitness rooms and studios and maybe even an ice rink or rock wall there is the potential for $2 million or more per year in revenue that could be collected as recreation fees. It would not only modernize our appeal but give empty-nesters another reason to stay.

The same possibilities exist for the entertainment sector be it a theater, wine bar, brew pub, game arcade or other space. In short, non-residential, experiential retail opportunities abound and the market already exists as evidenced by what Scarsdalians spend elsewhere.

These are admittedly ambitious ideas and to see them realized means using the full scope of land available to us. Scarsdale already owns the air rights over Metro North’s tracks. It adds about 40% to the acreage for the site and more cohesively integrates Garth Road with Scarsdale Avenue and the Village Center. I repeatedly hear pushback about this but as I know from working in technology, true innovation comes from solving the hardest problems first. If our air rights are not part of this project, that value will never be captured.

Yet the project scope for Freightway remains smaller and has largely concentrated on rental apartments and parking. I have serious misgivings about the parking piece. There is no question that commuters, village workers and shoppers contend for the same spaces in the village today. However, rates of car ownership are already starting to decline nationally and the advent of autonomous cars is likely to accelerate that trend. Will a garage we demand today have much relevance in the future of a building likely to stand for a century? We should either take an active role in solving the demand problem first through transportation alternatives or concede the unpopularity of such an idea and keep the current garage repaired until the future has more clarity than make a huge investment in the modern day equivalent of horse stables.

As for apartments, its hard to know the school enrollment impact. I lived in a 75 unit coop on Garth Road and we only had a couple of school children. Sure…not Scarsdale. School directories suggest around 20 kids from the Chateaux. But, those are not rentals. What we do know is that apartments be they rental, coop or condo are treated as “Class 2 properties” by New York assessment law and are taxed at rates far lower than the sale-priced based assessment for single family homes. Thus if a median priced home doesn’t cover the freight for even one school child then an apartment certainly wouldn’t.

This is perhaps a good time for me to lament that there is no place in Scarsdale where our police officers, firefighters, public works employees or even most teachers could afford to call home. I’d probably be less vocal about the tax inequity of rental and other apartments if they were to be populated by those without the same means. But aside from the 10% of units mandated for affordable housing, this discussion is about luxury rentals. Why would we give favor to those playing a tax arbitrage. Furthermore, lower taxes allow for more net revenue to the private landlord.
This gets to the heart of the matter which is the distribution of risk and reward. The village is offering up its best parcel of land in a must-win gambit while the stakes are not nearly as high for the partners being considered. They’ll put up the least amount of capital they can, borrow the rest and use an LLC to insulate themselves. The private side stands to generate $10 million or more per year in top line revenue while the village might receive $2 million. The annualized private investment return is likely to be 15% or more whereas it is unclear at this point whether the tax revenue gained by the village covers the increased cost of municipal services, schools and lost value of the land that is handed over as part of this transaction. While I’m not seriously suggesting this, it almost makes me wonder whether the village would be better off owning this project itself and claiming all of the benefits directly.
I encourage the board of trustees to consider revenue beyond just property taxes. The visioning study for Freightway was completed two years ago and predates a new reality for high-tax communities. We need to give more weight to financial considerations than were reflected in that report. As I identified earlier, there is the potential for net positive recreational fees revenue. While a garage might generate an initial inflow, it may decline in future years. Frankly, we might be better off negotiating a profit-sharing agreement on the whole project.

Thank you for you time, attention and service.


Remarks Delivered at Freightway Development Meeting December 11, 2019 by Brice Kirkendall-Rodríguez.

 
Scarsdale Village Board of Trustees And The Mayor Are Exposing Exposes Us To Significant Reputation Risk

Mayor Samwick did everything he could so that not one single person could ask the two bidding teams a single question. At the beginning of my remarks , I asked if it were possible that the bidders come to the front so that I could ask questions. The mayor refused to allow this. Unfortunately, he went back on his word. He had emailed me that we the taxpayers would be able to ask questions of the bidders.

Why did Samwick try so hard to squelch my questions? He is either hiding something or his colleagues, and he have not done the thorough analysis that should be done to protect taxpayers.  What is the point of having a public forum when he spent so much time trying to shut some of us down or to justify the weak and opaque processes that the trustees and he have had for the last year?  He never let us hear anything from the bidders other than their canned presentations. 
 
I wrote the Mayor Wednesday at 12:00pm and asked him to let residents know who was coming to present, so that we could be prepared with good comments and questions. He wrote me that he "did not know who was coming." Does he really expect us to believe that 7 hours before a meeting, he did not know who was coming?
 
Many of us were astounded that the Mayor unexpectedly curbed our speaking time to 3 minutes. Normally, the time is 5 minutes.  Many of us came to the meeting despite our demanding work schedules in order to learn more about the Freightway Development and to ask questions, not to be rushed and interrupted.
 
During the meeting, I was simply trying to ask this question of East End Capital and LCOR, "Where may Scarsdale residents find your audited financial statements so that we can evaluate your ability to cover your debt?" The last thing we want is to have a bidder who collapses during a recession due to too much debt, and we get stuck with some half-built mess. East End Capital could have answered, "sorry, we do not make that information public, we will let you know later," or maybe they would have even said "we have enough earnings to cover our debt."  A quick search through Real Estate Weekly shows that East End Capital and LCOR, just in the last three years, have taken out loans of about $400 million. Is that too much? To little? We do not know until those companies release their Earnings Before Interest Tax and Depreciation (EBITDA), so that we can analyze the level of coverage for total debts. 

Avalon Bay Communities is a public company, so we know a lot about its low level of debt, which it has been decreasing over the last couple of years; it is a single A rated company, which means that it has a low probability of default presently. How can residents evaluate both bidders' financials when East End Capital/LCOR are a complex set of multiple limited liability corporations and no audited financials are available?   
 
The Mayor also did not allow the bidders answer the following: Have you ever done business in any way with the current or previous mayor or Board of Trustees? Do they invest in you or lend you money? Have you had any relationship whatsoever with Westmont Real Estate Capital LLC where Mayor Samwick is a partner, TAP Growth Advisors, The Acceleration Project (both led by Trustee Jane Veron) or Arest Associates LLC (Led by Trustee Justin Arest)? What is your personal or professional relationship with the Mayor and Board?


 
One of the East End Capital partners, a Scarsdale resident, stated at the Freightway Meeting that he bought buildings on Garth Road. The information is on its website.
 

Scarsdale's property records show that 2-20 Garth Road properties were bought in 2017 by RBR Scarsdale LLC
 
54 and 56 Garth Road were also purchased in 2017 by Holly Investment Inc.

East End Capital's and LCOR's design would involve tearing down the buildings it bought in 2017 which contain the popular Italian restaurant Via Forno, which opened a year ago to much acclaim, and the just opened Westchester Burger, which the Mayor and Trustees celebrated with a ribbon cutting.
 
Celebration of Westchester Burger Opening, November 2019.
Dara Grunberg, Scarsdale resident and member of Village Ethics Committee, Scarsdale Forum Board, Library Board, and former Scarsdale Citizens Non-Partisan Party Campaign Chair, and David Peretz, East End Capital LLC Partner and Scarsdale resident at Village Freightway Development Meeting, December 11, 2019.


Bidders should have also been allowed to answer these questions:
  • Who are your investors? Domestic? Foreign?
  • Do you have written Environmental, Sustainability, and Governance (ESG) standards?  Have you won any awards for your ESG policies?
  • Do your investors invest in the firearms industry, fossil fuels or anything else that goes against your ESG policies?
  • Do you have any contingency liabilities of any kind including legal actions against you?
  • Are you required to abide by federal laws related to anti-money laundering, know your customer rules, and anti-terrorism financing laws? Where may we see your written policies on internal controls to make sure that you are not vulnerable and how may we verify your compliance?
  • Do you conduct stress tests to see what your earnings and liquidity would be like in a recession or market crisis? In other words, if the stock market decreases by 50% and residential and commercial real estate decrease by over 30%, would you still be liquid to meet all of our liabilities? Your assets by definition are illiquid, so in a downturn it is hard for you to sell your assets to meet obligations, what liquidity or credit liquidity facilities do you have set up now to meet adverse market or economic conditions?
  • Are your LLC partners and executives all men? Do you have any women or people of color in top executive positions?
The above questions are standard questions asked by corporate credit analysts when analyzing and evaluating the financial condition of companies.  My clients on Wall Street pay me to ask these questions and get answers. I am delivering these questions pro bono. I encourage residents and merchants to help me get answers before it is too late.


Mayra Kirkendall-Rodriguez


 

Scarsdale residents balk at housing development proposals around the village train station area


Developers pitched more housing around the village train station Wednesday night. And Scarsdale residents balked.

Robert Berg, a Scarsdale resident and a volunteer member of the Scarsdale Board of Assessment, said the village is a fully built-out community and that any adopted plan must guarantee a decrease in property taxes.


“Because of the recent imposition of the federal $10,000-per-year cap on SALT deductions and our very high property taxes, our real estate values have dropped precipitously in our price category, and especially at the high end,” Berg said.


“I have grave concerns that 220 to 280 apartment units, mostly rentals, can generate sufficiently enough property taxes to even come close to cover the incremental cost the project will impose on our schools and village services, let alone lower our existing residents’ property taxes,” he added. Another resident suggested that the chosen developer agree to cover a bond for additional expenses incurred by the school district.



You may find the complete Journal News article here.

Scarsdale residents react to possible Freightway plans

 


Rutherford Hall was standing room only Wednesday night, with every extra folding chair in the building moved into the courtroom to accommodate overflow. About 150 residents filled all the seats, and dozens more lined the perimeter of the room waiting for the community meeting with the board of trustees to begin.


The hot button topic was the potential redevelopment of Scarsdale’s Freightway parking garage on Garth Road. The garage serves as the primary parking facility for village merchants, commuters and others using the Metro-North Railroad station. In 2017 a conditions survey by Desmond Association determined the garage would require extensive repairs and maintenance that could cost up to $2.5 million by 2022. The board has also pointed out that the facility will need even greater repairs in the following 15 to 20 years, including a possible total replacement that could cost more than $25 million.



The complete article is published in The Scarsdale Inquirer.

 
"Over 30 residents lined up to express concerns about a number of issues, primarily how the increased number of apartment dwellers (specifically children) will impact the school district and stress existing resources.


Among other issues raised were:

1) Does Scarsdale need an influx of new residents in the village center, leading to more traffic congestion and crowding at the train stations;

2) Should the village build more residential units that will taxed less than single family homes;

3) Do the financial benefits of such a project outweigh potential risks;

4) Are there other options for the site besides a multi-use project with residential space;

5) What are the tax benefits that the village can expect; and

6) What is the financial condition of the two development groups?"

The complete article was publlshed in Scarsdale10583.

We Welcome Your Letters
 
 
Do you have anything that you want to say to the Scarsdale Mayor and Trustees? Please send us your letter, and we will publish it in our newsletter insuring that it gets to Village Hall and our thousands of newsletter readers.
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Out and About

Museum Passes

Scarsdale residents are entitled to borrow passes from the Scarsdale Public Library to visit an incredible select list of museums in New York City and Westchester County . Please visit the library site to see the list and to learn about the library's rules for borrowing passes.

Music Events


Scarsdale has numerous classical musical concerts throughout the year including Handel's Messiah, Beethoven's Ninth, and Verdi's Requiem. Here are the 2018-2019 calendars for:

Hoff-Barthelson Music School
The Scarsdale Congregational Church

If you know of other venues in Scarsdale with cultural events, please email them to us and we will post them here.



Family Activities in the Area

Visit  NY Metro Parents Westchester for a wide array of cultural and sports activities.
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About The Voters Choice Party


The Voters Choice Party was created in 2017 to increase transparency and accountability at Scarsdale Village Hall, to discuss issues relevant to residents, to give voters a choice of different candidates, and to increase voter turnout.

www.VotersChoiceParty.com 


 

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